Why are paper prices increasing?

It's clear to everyone that the Covid-19 pandemic has disrupted every business sector, accelerating demand in some industries, such as ecommerce, while others were brought to a halt amid lockdowns and travel restrictions. Commodities that once flowed across the planet ended up stuck in warehouses or harbours.

As the world slowly starts reopening and the new normal gives way to something approaching a pre-Covid landscape, something that is on the horizon is paper price increases. Denmaur Paper Media can help get you through the inevitable, but it's worth looking at why these paper price increases are on the way - and what you can do to mitigate the impact.

Several paper mills have announced increased prices on products including woodfree coated and uncoated grades, as well as graphic papers, all - so far - scheduled for this summer.

Other mills have yet to reveal their plans, and while it remains to be seen how far-reaching any price increases will be, it's worth being aware of the three major factors driving the decisions.

First: rising pulp prices. Mills have faced increased costs across the board when it comes to raw materials, including a huge increase in global wood pulp prices, sparked at first by shortages and then soaring demand in the past year.

For example, Northern Bleached Softwood Kraft is up by nearly 45% from $840 in 2020 to $1,200 per tonne at the time of writing - a level not seen in previous years.

Second: record high shipping and freight rates - the highest since the financial crisis of 2008-2009 - are being baked into contracts for the next 12 months.

In March 2021, the global shipping rate saw a 518% YoY increase, while according to S&P Global Platts, contract rates for a 40-foot container are reaching $2,500 to $3,000 for the route between Asia and North America, a 25% to 50% YoY increase.

Although spot rates for shipping are usually softer at this time of year, analysts have warned there is capacity for prices to rise further, something that is set to be a long-term, rather than short-term trend. Increases, albeit somewhat lower, have also been seen in European road freight charges too, which are up almost 10%.

Third: uncertainty around crude oil prices could lead to more hikes on top of the 103% YoY spike seen between March 2020 and 2021. The US Energy Information Administration has warned of increased prices due to lower production from OPEC and OPEC+ countries, and growing demand.

Denmaur Paper Media can help businesses navigate these challenging times, mitigating or even avoiding altogether the effects of increased freight rates, high energy costs and rising pulp prices.

Our free Paper Health Check service can determine whether companies are buying the best paper for their products and identify opportunities to make sometimes significant financial savings by highlighting alternative paper grades. We can also assess whether a firm's paper supply could be more eco-friendly, and suggest viable alternatives that could enhance publications' environmental profile. Backed by official quotes, samples and dummies, the service enables businesses to move on to a new paper grade in full confidence. Whether you are looking to upgrade, economise or maintain your current paper stock, our Paper Health check service will provide you with valuable, actionable insights. Find out more about what we do here or email us at info@denmaur.com